2022-23 – key implications for your super
AvSuper summarises the likely impact of the Federal Budget on your super and your retirement.
We’ve outlined below a summary of the key superannuation related elements of the Budget to help you understand them and any impact they may have on your retirement savings.
It is important for AvSuper to keep members informed about developments and potential changes to your super, one of your most significant assets. If you have concerns about how these Budget changes may affect you, you can call us with your questions, or make an appointment with one of our professional Senior Member Advice Consultants to obtain advice on your specific situation.
Chief Executive Officer
Generally the announcements made as part of the Budget will have to pass as legislation before they take effect. Therefore, Budget proposals should not be taken as fact yet, even if a starting date is proposed.
Some Budget proposals have not yet been explained in detail by the Government and industry consultation on draft legislation will be required. The final legislation could therefore be different from what was announced during the Budget and start dates may be changed. As further details become available we will analyse their relevance to AvSuper and report to members as appropriate.
This year’s Federal Budget includes a number of superannuation related changes, although most are adjustments to existing programs rather than introducing anything new or significant changes. While some of these changes may not directly affect you, we welcome any questions.
Key Budget measures affecting suparannuants
- A $250 cost of living payment for eligible pensioners, welfare recipients, veterans and concession card holders; this will be paid from April.
- An extension of the 50% reduction to the minimum drawdown requirement for income streams.
- Expansion of the First Home Buyers Guarantee Scheme
Halving of super drawdowns extended
The federal government is extending the 50 per cent reduction to minimum superannuation drawdown requirements for retirees into the next financial year.
Originally announced in March 2020 as part of the government’s response to the pandemic, Treasurer Josh Frydenberg said the reduction would now remain in place until 30 June 2023.
Around 1.8 million super accounts are currently subject to the minimum drawdown requirements that apply to account-based pensions and similar products.
Under the reduced minimum drawdown rates, self-funded retirees aged between 65 and 74 must withdraw 2.5 per cent of their account balance each year to be eligible for tax-free status on their earnings.
The minimum drawdown rate is currently 3 per cent for ages 75 to 79; 3.5 per cent for ages 80 to 84; 4.5 per cent for ages 85 to 89; 5.5 per cent for ages 90 to 94; and 7 per cent for ages 95 and above, while a rate of 2 per cent applies to those under 65.
Please see more details here: https://www.avsuper.com.au/income-streams/drawdown/
The government also announced a number of measures for those receiving the age pension including the one-off $250 cost of living payment.
The payment will be made in April 2022 to eligible recipients including those receiving the age pension or carer payments, Pensioner Concession Card (PCC) holders, Commonwealth Seniors Health Card holders and eligible Veterans’ Affairs payment recipients and Veteran Gold card holders.
It also intends to increase Medicare levy low-income thresholds for seniors and pensioners, families and singles from 1 July 2021.
The increase in thresholds takes account of recent movements in the consumer price index so that low-income individuals continue to be exempt from paying the Medicare levy. The threshold for singles will be increased from $23,226 to $23,365. The family threshold will be increased from $39,167 to $39,402.
For single seniors and pensioners, the threshold will be increased from $36,705 to $36,925. The family threshold for seniors and pensioners will be increased from $51,094 to $51,401.
For more information, please review the AvSuper Retirement Guide
Expansion of the First Home Buyers Guarantee Scheme
The Home Guarantee Scheme allows first home buyers to build or purchase a newly built home with a low deposit, replacing the need for commercial lenders’ mortgage insurance.
The Government is expanding the scheme to make available:
- 35,000 guarantees each year (up from the current 10,000) from 1 July 2022
- 10,000 guarantees each year from 1 October 2022 to 30 June 2025 under a new Regional Home Guarantee
- 5,000 guarantees each year from 1 July 2022 to 30 June 2025 to expand the Family Home Guarantee.
Eligible first home buyers may also be able to take advantage of the First Home Super Saver Scheme which allows them to use the super system to save their first home deposit.
Minimum superannuation threshold (Superannuation Guarantee)
The legislated superannuation guarantee increase to 10.5% remains scheduled for 1 July 2022
We hope you find this information useful to understand the changes proposed by the Federal Government and how they might affect you if they become law. As always, we will keep members informed about any changes as things develop or become law, so be sure to watch our website and read our Annual Report.
If you have any queries or wish to discuss your super account in details, please contact our Member Services Team by email, AvChat or calling 1300 128 751.
Email: email@example.com | Local call: 1300 128 751 | www.avsuper.com.au